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San Francisco Business Times

Housing Activists Push for ‘Highest Possible’ Oakland Impact Fees as Mayor Calls for Patience

By Roland Li

More than 100 activists are expected to rally on Thursday afternoon outside Oakland City Hall to call for the city to immediately implement the highest economically feasible impact fee to fund affordable housing.

The Oakland Community Investment Alliance — a coalition that includes East Bay Housing Organizations, which represents nonprofit developers, the Greenbelt Alliance, nonprofit law firm Public Advocates and transit group TransForm — is organizing the rally. Renters and religious leaders are also expected to take part.

Matt Leber, campaign and coalition director at EBHO, said the city needs to pass fees at the “highest level possible” to combat widespread rent increases and a lack of affordable housing. The groups want an impact fee of more than $20,000 for each new market-rate unit built and an immediate implementation of the fees that doesn’t provide an exemption period for some new projects.

Oakland Mayor Libby Schaaf disagrees on the timing of the fees. She believes that there should be additional time before the fees go into effect, so projects don’t lose their financing as their economics suddenly change.

“I’m definitely in favor of some level of phase-in,” Schaaf told the Business Times. “I do think we need to adopt something right away, but it’s got to be at a level that it’s not going to kill projects that are already entitled, but haven’t pulled their building permits yet.”

She’s hopeful that activists can reach a compromise with market-rate developers, whom she sees as essential partners to address Oakland’s housing needs. “Part of our affordability crisis is simply supply. We do not have enough housing to meet the demand. And so building new housing as quickly as possible at all income levels is part of our strategy to address the affordability crisis,” said Schaaf.

Oakland has more than 14,000 housing units in its “pipeline,” which includes projects that have been approved and proposed, but only a handful of major projects have started construction or finished in the current boom. Unlike in neighboring San Francisco, Oakland built far more affordable than market-rate housing in 2014. Developers built 788 units in Oakland last year. Seventy-two percent of those units were affordable and subsidized by the government, according to Oakland city planning.

Last year, Madison Park Financial’s 92-unit Lampwork Lofts was the only major market-rate project to open in Oakland and accounted for nearly half of the 220 market-rate units that were built. This year, only a few new market-rate projects have opened: Signature Development Group’s 30-unit Mason at Hive, with 71 more units to open by the spring. Citrine Advisors also completed 20 units at 1601 Clay St. and Hakari LLC completed 14 units at 1130 65th St.

Despite the low housing production, activists believe fees are necessary and can be used in an economically sustainable way. “The region’s in an affordable housing crisis and it’s difficult to find solutions. Oakland really has an opportunity to shine at this time,” said Joel Devalcourt, the East Bay regional representative at Greenbelt Alliance.

Develcourt sees numerous reasons for Oakland’s need for an impact fee. The city’s numerous neighborhood plans, such as Broadway-Valdez, Lake Merritt and Coliseum City, didn’t address the issue of affordable housing on a local level. The city instead committed to a citywide policy to extract benefits from market-rate projects through an impact fee.

Other cities around the Bay Area have also passed or are seeking to strengthen their fees. San Francisco has proposed a transit fee of $7.74 per square foot for residential developments under 99 units and $8.74 for every unit in excess of 99 units. San Jose is enacting an affordable housing fee of $17 per square foot for new residential development, which will go into effect on July 1, 2016.

Oakland’s neighbors, Emeryville and Berkeley, each have impact fees of $28,000 fees per unit to fund. Berkeley is also seeking millions in dollars of concessions from developers of new downtown highrises.

“It’s been fully proven that it’s not going to kill the economy if it’s done right,” said Devalcourt. “We believe the development community has enough time to take this in consideration.”

The city has released a nexus study with a ceiling of legally allowable maximum fees, but it still hasn’t released an Economic Feasibility Analyses, which would set a lower fee amount that consultants believe the market can support. City officials didn’t immediate return an inquiry regarding when the analyses would be released.

The city’s impact fee working group is also meeting on Thursday. The city is seeking to schedule a fourth meeting before the end of the month, which may lead to recommendations on how to enact the fees, said one member of the Working Group, who declined to be named because the meetings are private.

The pro-fee rally will take place on Thursday at 3 p.m. outside Oakland City Hall. The City Council is also holding a hearing on Dec. 15 on the fees.


This article was originally by the San Francisco Business Times.

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